• Sun
  • Dec 28, 2014
  • Updated: 5:34am

Incentives for new data centres

PUBLISHED : Saturday, 04 February, 2012, 12:00am
UPDATED : Saturday, 04 February, 2012, 12:00am

The government will encourage the building of data centres with incentives for redeveloping industrial buildings.

Hong Kong, free from the threat of natural disasters and political turmoil, is deemed the safest place in Asia to set up data centres. But the scarcity of land makes it hard for firms to find suitable sites to develop them, a government study says.

'As it is hard for companies to find new land, so redeveloping industrial buildings would be a way out,' said Elizabeth Tse Man-yee, permanent secretary at the commerce and economic development bureau.

In its budget announcement this week, the government outlined two initiatives to promote converting industrial estates into data centres. One initiative is aimed at small firms, the other is targeted at larger 'high-tier' operations.

Previously, developers who wanted to demolish industrial buildings to build new centres were required to pay a land premium, which was calculated based on the site's optimal use and the proposed intensity of the redevelopment.

That has been deterring the building of high-tier data centres, which are usually low-rise buildings with a development intensity lower than its optimal use, according to Gregory So Kam-leung, the bureau's head.

To lower the premium payable by data centre developers, the government has proposed eliminating the 'optimal' factor and calculating the premium based on the data centres' development intensity.

Another measure will eliminate the waiver fee of 50 cents per square foot for changing parts of industrial buildings aged 15 years or more into data centres.

Data centres are an important component of the economy as they support the operation of financial services, trade and the booming online-based data industry.

Firms also tend to set up their regional headquarters in places where they have data centres, So says.

To compete with other Asian cities, it was vital that the government provided incentives for their development, he added.

The two measures will be introduced between this year and next, and will run until March 2016.

In the chief executive's last policy address, the government announced it had reserved two hectares in Tseung Kwan O for data centres. The first site will be auctioned next year at the earliest.

A high-tier data centre costs more than HK$1 billion.

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